This fMRI study investigated brain activation during creative idea generation using a novel approach allowing spontaneous self-paced generation and expression of ideas. Specifically, we addressed the fundamental question of what brain processes are relevant for the generation of genuinely new creative ideas, in contrast to the mere recollection of old ideas from memory. In general, creative idea generation (i.e., divergent thinking) was associated with extended activations in the left prefrontal cortex and the right medial temporal lobe, and with deactivation of the right temporoparietal junction. The generation of new ideas, as opposed to the retrieval of old ideas, was associated with stronger activation in the left inferior parietal cortex which is known to be involved in mental simulation, imagining, and future thought. Moreover, brain activation in the orbital part of the inferior frontal gyrus was found to increase as a function of the creativity (i.e., originality and appropriateness) of ideas pointing to the role of executive processes for overcoming dominant but uncreative responses. We conclude that the process of idea generation can be generally understood as a state of focused internally-directed attention involving controlled semantic retrieval. Moreover, left inferior parietal cortex and left prefrontal regions may subserve the flexible integration of previous knowledge for the construction of new and creative ideas.